WASHINGTON - Northrop Grumman and the maker of Airbus planes beat out Boeing Co. to win a $35 billion government contract to build military refueling planes, the Air Force said today.

The selection of Los Angeles-based Northrop Grumman and its Paris-based partner, European Aeronautic Defence and Space Co., came as a surprise to Wall Street.

It is a big blow to Chicago-based Boeing, which has been supplying refueling tankers to the Air Force for nearly 50 years and had been widely expected to win the deal.

The contract positions EADS to break into the U.S. military market in a big way. And it opens up a huge new business opportunity for Northrop Grumman.

The EADS/Northrop Grumman team plans to perform its final assembly work in Mobile, although the underlying plane would mostly be built in Europe. And it would use General Electric engines built in North Carolina and Ohio.

Northrop Grumman, which is based in Los Angeles, estimates a Northrop/EADS win would produce 2,000 new jobs in Mobile and support 25,000 jobs at suppliers nationwide.

"I've never seen anything excite the people of Mobile like this competition," Sen. Jeff Sessions, R-Mobile, said. "We're talking about billions of dollars over many years so this is just a huge announcement."

The Air Force has estimated the tanker contract will be worth between $30 billion and $40 billion over 10 to 15 years. It is the first of three deals that could eventually be worth as much as $100 billion over 30 years to replace the entire Air Force fleet of nearly 600 refueling tankers.